REG - Treatt PLC - Preliminary results announcement <Origin Href="QuoteRef">TET.L</Origin> - Part 2
08/12/2015 07:23
- Part 2: For the preceding part double click ID:nRSH3110Ia
Net current assets 31,564 27,585
Non-current liabilities
Borrowings (7,065) (7,857)
Trade and other payables - (23)
Post-employment benefits (2,959) (2,529)
Deferred tax liabilities (1,037) (1,007)
Derivative financial instruments (699) (511)
Redeemable loan notes payable - (675)
(11,760) (12,602)
Total liabilities (25,241) (28,607)
Net assets 33,185 28,760
GROUP BALANCE SHEET (continued)
as at 30 September 2015
2015 2014
£'000 £'000
EQUITY
Share capital 1,050 1,048
Share premium account 2,757 2,757
Own shares in share trusts (423) (549)
Hedging reserve (700) (377)
Foreign exchange reserve 1,119 291
Retained earnings 29,382 25,590
Total equity attributable to owners of the Parent Company 33,185 28,760
The notes on pages 23 to 28 form part of this preliminary statement
GROUP STATEMENT OF CASH FLOWS
for the year ended 30 September 2015
2015 2014
£'000 £'000
Cash flow from operating activities
Profit before taxation 7,776 5,502
Adjusted for:
Depreciation of property, plant and equipment 1,244 1,222
Amortisation of intangible assets 175 172
Loss on disposal of property, plant and equipment 46 17
Gain on disposal of intangible assets - (2)
Net finance costs 740 724
Share-based payments 198 46
Decrease in fair value of derivatives 143 115
Decrease in post-employment benefit obligations (208) (230)
Operating cash flow before movements in working capital 10,114 7,566
Movements in working capital:
Decrease/(increase) in inventories 2,907 (4,322)
(Increase)/decrease in trade and other receivables (2,282) (1,331)
(Decrease)/increase in trade and other payables, and provisions (2,072) 1,615
Cash generated from operations 8,667 3,528
Taxation paid (1,469) (1,552)
Net cash from operating activities 7,198 1,976
Cash flow from investing activities
Proceeds on disposal of property, plant and equipment 5 4
Purchase of property, plant and equipment (924) (538)
Purchase of intangible assets (108) (212)
Interest received 1 1
(1,026) (745)
GROUP STATEMENT OF CASH FLOWS (continued)
for the year ended 30 September 2015
2015 2014
£'000 £'000
Cash flow from financing activities
(Decrease)/increase in bank loans (2,145) 215
Interest paid (741) (725)
Dividends paid (1,978) (1,899)
Net purchase of own shares by share trusts 180 91
(4,684) (2,318)
Net increase/(decrease) in cash and cash equivalents 1,488 (1,087)
Effect of foreign exchange rates (33) 13
Movement in cash and cash equivalents in the period 1,455 (1,074)
Cash and cash equivalents at beginning of period 21 1,095
Cash and cash equivalents at end of period 1,476 21
Cash and cash equivalents comprise:
Cash and bank balances 1,477 629
Bank borrowings (1) (608)
1,476 21
The notes on pages 23 to 28 form part of this preliminary statement
GROUP RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the year ended 30 September 2015
2015 2014
£'000 £'000
Movement in cash and cash equivalents in the period 1,455 (1,074)
Repayment/(increase) in bank loans 2,145 (215)
Cash outflow from changes in net debt in the period 3,600 (1,289)
Effect of foreign exchange rates (171) (1)
Movement in net debt in the period 3,429 (1,290)
Net debt at beginning of period (9,584) (8,294)
Net debt at end of period (6,155) (9,584)
The notes on pages 23 to 28 form part of this preliminary statement
NOTES TO THE PRELIMINARY STATEMENT
1. Basis of preparation
In accordance with Section 435 of the Companies Act 2006, the Group confirms
that the financial information for the years ended 30 September 2015 and 2014
are derived from the Group's audited financial statements and that these are
not statutory accounts and, as such, do not contain all information required
to be disclosed in the financial statements prepared in accordance with
International Financial Reporting Standards ("IFRS"). The statutory accounts
for the year ended 30 September 2014 have been delivered to the Registrar of
Companies. The statutory accounts for the year ended 30 September 2015 have
been audited and approved, but have not yet been filed.
The Group's audited financial statements for the year ended 30 September 2015
received an unqualified audit opinion and the auditor's report contained no
statement under section 498(2) or 498(3) of the Companies Act 2006.
The financial information contained within this preliminary statement was
approved and authorised for issue by the Board on 7 December 2015.
2. Accounting policies
These financial statements have been prepared in accordance with the
accounting policies set out in the full financial statements for the year
ending 30 September 2014.
There were no new standards and amendments to standards which are mandatory
and relevant to the Group for the first time for the financial year ending 30
September 2015 which had a material effect on this preliminary statement.
3. Accounting estimates
The preparation of the preliminary statement requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expenses. In preparing this preliminary statement, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those applied to
the audited consolidated financial statements as at, and for the year ended,
30 September 2014.
4. Going concern
As at the date of this report, the Directors have a reasonable expectation
that the Group has adequate resources to continue in business for the
foreseeable future. During the year all the Group's expiring banking
facilities have been renewed on existing or improved terms. Accordingly, this
preliminary statement has been prepared on the going concern basis.
5. Risks and uncertainties
The operation of a public company involves a series of risks and uncertainties
across a range of strategic, commercial, operational and financial areas. The
principal risks and uncertainties that could have a material impact on the
Group's performance over the next twelve months (for example, causing actual
results to differ materially from expected results or from those experienced
previously) are the same as those detailed on pages 17-18 of the 2014 Annual
Report and Financial Statements.
NOTES TO THE PRELIMINARY STATEMENT (continued)
6. Segmental information
Business segments
IFRS 8 requires operating segments to be identified on the basis of internal
financial information reported to the Chief Operating Decision Maker (CODM).
The Group's CODM has been identified as the Board of Directors who are
primarily responsible for the allocation of resources to the segments and for
assessing their performance. The disclosure in the Group accounts of
segmental information is consistent with the information used by the CODM in
order to assess profit performance from the Group's operations.
The Group operates one global business segment engaging in the manufacture and
supply of ingredient solutions for the flavour, fragrance and FMCG markets
with manufacturing sites in the UK, US and Kenya. Many of the Group's
activities, including sales, manufacturing, technical, IT and finance, are
managed globally on a Group basis.
Geographical segments
The following table provides an analysis of the Group's revenue by
geographical market:
2015 2014
Revenue by destination £'000 £'000
United Kingdom 10,878 9,974
Rest of Europe - Germany 4,576 4,777
- Ireland 7,903 5,577
- Other 10,834 11,212
The Americas - USA 27,447 22,772
- Other 6,721 6,866
Rest of the World - China 4,840 4,804
- Other 12,735 13,207
85,934 79,189
All Group revenue is in respect of the sale of goods, other than property
rental income of £17,000 (2014: £17,000). No country included within 'Other'
contributes more than 5% of the Group's total revenue. The Group's largest
customer, together with its affiliates and agents, represented 12.1% (2014:
8.2%) of Group revenue. There were no other customers which represented more
than 10% of Group revenue.
7. Exceptional items
The exceptional items referred to in the income statement can be categorised
as follows:
2015 2014
£'000 £'000
Legal and professional fees 174 292
Agency termination - 1,110
174 1,402
Less: tax effect of exceptional items (18) (244)
156 1,158
The exceptional items in the year all relate to non-recurring items. The
legal and professional fees relate to the earn-out dispute in relation to the
acquisition of the Earthoil Group, which remains on-going. The agency
termination costs in the prior year related to statutory compensation due upon
giving contractual notice in respect of the strategic termination of a
longstanding agency arrangement.
NOTES TO THE PRELIMINARY STATEMENT (continued)
8. Taxation
2015 2014
£'000 £'000
Analysis of tax charge for the year
Current tax:
UK corporation tax on profits for the period 956 732
Adjustments to UK tax in respect of previous period (11) (111)
Overseas corporation tax on profits for the period 931 909
Adjustments to overseas tax in respect of previous periods 33 (72)
Total current tax 1,909 1,458
Deferred tax:
Origination and reversal of timing differences (59) 20
Effect of reduced tax rate on opening assets and liabilities - (13)
Adjustments in respect of previous periods (64) 88
Total deferred tax (123) 95
Tax on profit on ordinary activities 1,786 1,553
Analysis of tax credit/(charge) in other comprehensive income (OCI):
Current tax:
Foreign currency translation differences (2) (11)
Actuarial loss on defined benefit pension scheme 43 51
Total current tax 41 40
Deferred tax:
Cash flow hedges 81 (8)
Actuarial loss on defined benefit pension scheme 86 188
Total deferred tax 167 180
Total tax credit recognised in OCI 208 220
Analysis of tax credit/(charge) in equity:
Current tax:
Share-based payments 38 17
Deferred tax:
Share-based payments (2) 26
Total tax credit recognised in equity 36 43
NOTES TO THE PRELIMINARY STATEMENT (continued)
9. Earnings per share
Basic earnings per share
Basic earnings per share is based on the weighted average number of ordinary
shares in issue and ranking for dividend during the year. The weighted
average number of shares excludes shares held by the Treatt Employee Benefit
Trust (EBT), together with shares held by the Treatt SIP Trust (SIP), which do
not rank for dividend.
2015 2014
Earnings (£'000) 5,990 3,949
Weighted average number of ordinary shares in issue (No: '000) 51,464 51,335
Basic earnings per share (pence) 11.64p 7.69p
Diluted earnings per share
Diluted earnings per share is based on the weighted average number of ordinary
shares in issue and ranking for dividend during the year, adjusted for the
effect of all dilutive potential ordinary shares. The number of shares used
to calculate earnings per share (EPS) have been derived as follows:
2015 2014
No ('000) No ('000)
Weighted average number of shares 52,450 52,405
Weighted average number of shares held in the EBT and SIP (986) (1,070)
Weighted average number of shares used for calculating basic EPS 51,464 51,335
Executive share option schemes 262 40
All-employee share options 152 177
Weighted average no. of shares used for calculating diluted EPS 51,878 51,552
Diluted earnings per share (pence) 11.55p 7.66p
Adjusted earnings per share measures are calculated based on profits for the
year attributable to owners of the Parent Company before exceptional items as
follows:
2015 2014
£'000 £'000
Earnings for calculating basic and diluted earnings per share 5,990 3,949
Adjusted for:
Exceptional items (see note 7) 174 1,402
Taxation thereon (18) (244)
Earnings for calculating adjusted earnings per share 6,146 5,107
Adjusted basic earnings per share (pence) 11.94p 9.95p
Adjusted diluted earnings per share (pence) 11.85p 9.91p
NOTES TO THE PRELIMINARY STATEMENT (continued)
10. Dividends
Equity dividends on ordinary shares:
Dividend per share for years ended
30 September:
20152 20141 20131 2015 2014
Pence Pence Pence £'000 £'000
Interim dividend 1.28p 1.24p 1.10p 638 565
Final dividend 2.76p 2.60p 2.60p 1,340 1,334
4.04p 3.84p 3.70p 1,978 1,899
1 Accounted for in the subsequent year in accordance with IFRS.
2 The declared interim dividend for the year ended 30 September 2015 of 1.28
pence was approved by the Board on 18 May 2015 and in accordance with IFRS has
not been included as a deduction from equity at 31 March 2015. The dividend
was paid on 16 October 2015 to those shareholders on the register at 11
September 2015 and will, therefore, be accounted for in the financial
statements for the year ended 30 September 2016.
11. Contingent liabilities
As previously reported, the sellers of the Earthoil Group, which was wholly
acquired in April 2008, filed a claim in the Chancery Division of the High
Court against the Group for £1.8m which they subsequently extended. The claim
relates to various matters in respect of the earn-out, being the deferred
consideration payable to the sellers in respect of the acquisition of the
Earthoil Group.
Following rulings by the High Court and Court of Appeal on issues of
contractual interpretation, £1,486,000 of the substantive claim, being the
quantum of the earn-out, has been referred to chartered accountants for expert
determination (the 'expert'). Following the outcome of the expert
determination process, which is expected in the first half of 2016, the
outstanding issues in the claim (totaling a further £694,000) may be heard
when the matter returns to the High Court. The costs of resolving the dispute
currently total £1,113,000, of which the current year's costs of £174,000 have
been included in exceptional items on a consistent basis to the prior year.
The total eventual legal and professional fees of the dispute are currently
unknown, but are likely to exceed £1.25m; apportionment of costs between the
parties will be determined by the Court following conclusion of the entire
claim.
The amount included in these financial statements as a liability in respect of
the earn-out is based on the earn-out notice issued to the vendors in 2012, as
subsequently supported by our submission to the expert. This is the only
appropriate estimate which can be made until the outcome of the expert
determination process is known and as with any litigation there can be no
certainty of the eventual outcome.
NOTES TO THE PRELIMINARY STATEMENT (continued)
12. Related party transactions
Treatt Plc, the Parent Company, entered into the following material
transactions with related parties:
Transactions with subsidiaries
2015 2014
£'000 £'000
Interest received on loan notes from:
Earthoil Plantations Limited 14 14
Earthoil Kenya PTY EPZ Limited 6 6
Dividends received from:
R C Treatt & Co Limited 3,072 936
Treatt USA Inc 1,021 902
Balances with subsidiaries:
2015 2014
£'000 £'000
Redeemable loan notes receivable:
Earthoil Plantations Limited 950 950
Earthoil Kenya PTY EPZ Limited 400 400
Amounts owed to/(by) parent undertaking:
Earthoil Plantations Limited (61) 45
R C Treatt & Co Limited 116 (13)
The redeemable loan notes are redeemable in full on 31 December 2015 or from
31 March 2009 on request from the issuer. Interest is receivable at 1% above
UK base rate. Amounts owed to the Parent Company are unsecured and will be
settled in cash.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This announcement contains forward-looking statements that are subject to risk
factors associated with, among other things, the economic and business
circumstances occurring from time to time in the countries, sectors and
markets in which the Group operates. It is believed that the expectations
reflected in these statements are reasonable but they may be affected by a
wide range of variables which could cause actual results to differ materially
from those currently anticipated. No assurances can be given that the
forward-looking statements in this announcement will be realised. The
forward-looking statements reflect the knowledge and information available at
the date of preparation of this announcement and the Group undertakes no
obligation to update these forward-looking statements. Nothing in this
announcement should be construed as a profit forecast.
This information is provided by RNS
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